Judge Posner: No Damages Despite Infringement

Compensating for Harm: In most tort cases, the harm is easy to identify (if not prove). A negligent driving accident results in property damage. Tortious battery leads to medical bills. However, the non-rivalrous nature of intellectual property often makes the harm more difficult to ascertain. No one is directly injured per se when a third party begins to use an inventor's idea without authorization. Rather, the idea is still available and a third party's separate use of the invention does not prevent the inventor from continuing use the invention as well. Competitive injury sometimes comes into play. Of course, in most situations we don't think of competitive injury as an actionable harm, but rather classify it as beneficial competition – survival of the fittest. And, in most US patent lawsuits, the patented invention does not relate to any ongoing market competition between the parties. The legal harm does exist, but it comes from the statutory exclusive right that guarantees an exclusive entitlement to the patentee along the potential for injunctive relief and a reasonable royalty. Patentees expect to collect rents if others use their patented inventions. Litigation damages are those rents.

Judge Richard Posner is sitting by designation as a trial court judge in a pending infringement lawsuit between Apple and Motorola. (N.D.Ill. 11–cv-8540). Judge Posner's opinions are always interesting to read and this case is no exception. In a recent order, Judge Posner canceled the jury trial scheduled for this week and instead opined that the case is moot because there are no damages and therefore, “neither party can establish a right of relief.” In the order, Judge Posner indicated that a full opinion would be forthcoming, likely within the week.

The crux of the order is that, even if Apple's asserted patents are valid and infringed, Apple cannot prove any damages stemming from the infringement nor can it prove that the harm of ongoing infringement is sufficient to demand injunctive relief.

Damages not an Element: For some causes of action, harm is considered an element of the offense that must be proven before liability is found. Ordinary defamation requires harm. Likewise, murder requires a death. However, many other causes of action (including patent infringement) do not require a showing of harm for the substantive case. Rather, the the usual approach in patent cases is to first determine whether infringement has occurred (without regard to the damage caused) and then determine the appropriate damages. This approach is derived by the patent statute that defines infringement in 35 U.S.C. 271 without regard to damages. A separate provision (discussed below) then suggests a damage calculation method.

Patent Infringement but No Damages?: Section 284 of the Patent Act briefly defines the scope of damages available for infringement. The statute indicates that damages should be “adequate to compensate for the infringement but in no event no less than a reasonable royalty for the use made.” Many see the statute as offering a minimum statutory damage award of at least a reasonable royalty. In my view, one implication of the statute is that damages will never be properly calculated as zero. Rather, even a nominal infringement should result in at least a few pennies as the reasonable royalty.

Proving Damages: It is easy to reconcile my notion that infringement damages are always posigive with Judge Posner's conclusion that no damages exist in this case. The missing linkage is the procedural reality that it is the patentee's burden to prove damages. A planitiff that cannot prove damages should not expect a court to speculate on the proper award. Rather, without that proof, the proper award is zero (or perhaps a nominal award of $1). Here, because Apple's damages experts have either been rejected by the court or else have provided unbelievable reports, Apple's award will be zero.

“Yes, but in accordance with the principles of equity (which is also in the statute), not all violations of rights are worth preventing by injunction – only the ones that would cause irreparable harm.”

Not quite, Mr. Strawman.

The principles of equity have an even more basic principle that you never quite seem able to get your head wrapped around: make the aggrieved whole.

As Inviting Body Punches schools you, and as others continue to school you, you need to understand the nature of a patent and apply all of the principles of equity (and not just the ones that suit your ill-begotten h_atred of patents).

Mr. Easily, I fully agree with this post. Posner seems to believe that if one does not prove damages there legally is no possibility of an injunction. While he has yet to explain why, let us assume for the moment that he thinks that the failure to prove damage is a failure to prove liability, the first prong of the four that establish a right to an injunction.

Jeff, Every sale of a patent is subject to prior grants and legally vested rights. The new patent owner here cannot sue anyone who legally owns a patented product from using and selling that product. That is the law.

Comment: If Posner didn’t have such a big reputation, I would suggest that either he doesn’t have a clue about patent law, or that he knows something about patent law that nobody else knows.

Just for example, Apple points out that all it wants is for Motorola to remove the patented features from it phones, which even Motorola testified was easily done at minimum cost. Posner suggests however that this would be devastating to Motorola. What? Why? If these patents are critical to Motorola’s continued survivability in the cell phone market as suggested by Posner’s statement, it would seem that there is or was something fundamentally flawed in Posner’s discussion of the damages issue regarding Apple’s patents.

Turning to Motorola patent: Motorola is willing to license the patent on FRAND terms which are stated to be 2.2% Apple is unwilling to pay this rate. So is that justification for not issuing an injunction?

What if Apple continues to infringe and continues to not pay the 2.2%. Why aren’t Motorola’s damages in any future litigation that 2.2%. Is Apple’s continued infringement willful? Are they not risking the treble damages?

Posner has to know something we observers do not know, otherwise he seems way out there.

Eye dont see how it should be the responsability of the plaintiff to prove damages in infringement if the defendants dident consider it valuable then they wouldent have stolen it in the first place. Each feature has a value revelant to the overall consumer willing to pay price.

Tripple damages is something that should be inforced in inventorship disputes where the oposing party is using there monatary abilities to overwhelm the ability of the indegent to fight a protracted legal battles it should be assesed in order for the underdog to afford legal representatives

Company A owns a Patent for an automobile accessoy. they go bankrupt. their assets in bankruptcy are two protypes of their patented product that they acquired during the time they owned the Patent and the Patent itself. The bankruptcy trustee sells the naked Patent and nothing else to buyer B. the trustee next wants to sell the remainder of the bankruptcy estate, which is the two prototypes. the buyer of the Patent “B” threatens to sue the trustee for infringement if trustee transfers the protoypes to anyone but “B”. are the remaining prototypes protected by the patent exhaustion doctrine? even if it is an act of infringement, are “B”‘s damages nominal as they never had any ownership interest in the prototypes?

IBP, I agree with this analysis, but consider the question. In determining the right to an injunction, one must consider whether a legal remedy is adequate. When I went to school, an ongoing infringement or tort or nuisance was the very thing that one looked for to determine whether a legal remedy was adequate. I don't know why this basic law should not apply to patents.

Recall, please, that one may seek an injunction as the only remedy in an infringement case. One does not have to seek damages and in some, if not many, cases, damages are not available due to lack of notice of infringement. Therefor, the failure of proof of damages seems irrelevant to whether there should be an injunction, assuming of course, that infringement itself is a violation of the law and of one's exclusive rights.

Posner's original dismissal seem to suggest that infringement itself is irrelevant to the analysis and that one must always prove damages before there is a legal wrong. I find this thinking extraordinary given Art. 1, Section 8 of the constitution, 35 USC 271 and 283. The later reads,

"…[C]ourts … may grant injunctions … to prevent the violation of any right secured by patent…."

Without an injunction, the parties can simply file suit once again for acts of infringement that took place since the filing of the lawsuit in the first place. Why? Infringement is a statutory violation of the law.

The legal remedy of damages requires proof of loss. In order for any such proof to be available, the loss must have actually been incurred, otherwise it is merely speculative and cannot be proven.

AFAIK there are no legal remedies for damages to be incurred in the future.

For instance, how would you ever know that infringement is actually ongoing? It could stop at any time. Even if the defendant declares in the morning their intention to continue infringing, their plant and warehouse might burn to the ground tomorrow.

Reasonable royalty going forward could conceptually be construed as a present quantification of future damages, with the condition precedent that infringement will have occurred–but that is not a legal remedy.

And, just because a remedy is spelled out in statute does not mean that it is a legal remedy, injunction in 35 USC 283 being a prime example.

So, the legal remedy of damages is only legally adequate to compensate for loss already incurred and able to be proved, IMO.

Once again, the essential test for any equitable remedy is whether, after all legally available remedies have been considered, there remains an unremedied unfairness to the plaintiff. Of course, the plaintiff must come to equity with clean hands.

If a particular equitable remedy offers a type of remediation that could both accurately and precisely make the plaintiff whole with regard to the type of loss proved, then it must be considered by a court, either if the issue has been properly placed before the court, or sua sponte based on the inherent equitable jurisdiction of the court, and the equitable factors then considered.

And as far as “reasonable royalty” is concerned, it is not a statutory remedy as used in 35 USC 284. It is mentioned merely as a method of determining a lower limit of a damages award that compensates for past infringement, where lost profits cannot be proved to the satisfaction of the court.

“A reasonable royalty going forward”, as used by Posner, that does not compensate for any incurred loss actually able to be proved by the plaintiff, is an equitable remedy, and not a statutorily-provided legal remedy. It provides remediation of the same type of loss as that remediated by injunction, only it is not as well-matched to the nature of that loss as is injunction. To achieve the gold standard of loss-remedy matching afforded by injunction, the ebay factors need to be proved, in addition to general equitable factors. In a situation where they cannot all be proved, yet unfairness to the plaintiff remains, the equitable remedy of reasonable royalty going forward remains, akin to the equitable remedy of unjust enrichment.

It is the silver standard of loss-remedy matching, and is entirely within the inherent equitable jurisdiction of the court to raise sua sponte.

Does fairness require that the character of the remedy match the character of the loss?

IMHO, the answer to this is yes,

In the humble opinion of the law, the answer to this is “no”, and has been for centuries, and that answer could not be clearer. If the answer were “yes”, then not only would MercExchange have gotten its injunction against eBay, but the actual test for an injunction (not only in patent law, but in all areas of law) would be “did you win your case?”

equitable remedy of reasonable royalty

You mean the statutory remedy of reasonable royalty?

Yes, they are to address it, and in particular they are to address why in the world they should be getting an injunction if everybody else gets to infringe these “exclusive rights” for money.

Ah, the game is afoot! Thank-you for actually reading and responding meaningfully to a post. (IANAE, are you listening?) I will consider your points in the order in which they were made.

The second ebay factor “…requires a plaintiff to demonstrate…that remedies available at law are inadequate to compensate for that injury…” has a factual predicate that must be determined before any consideration can be made as to whether the factor is satisfied; that factual predicate is that there exist “remedies available at law”. The belief of a party as to the adequacy of any such remedy can only be properly considered after the “availability” of said remedy has been established as a matter of fact, otherwise any such opinion will have no logical factual basis.

So, as we both know, we are left to determine what is meant by “remedies available at law”. This has usually been understood to generally refer to “legal remedies”, as distinguished from “equitable remedies”, such that the factor has been understood to mean that an equitable remedy is only appropriate when no legal remedy is adequate.

If one accepts this understanding, then the factor pivots on the concept of adequacy, as it is used with regard to equitable remedies. Equity is all about “fairness”. What is fair, as far as a reasonable aggrieved patent infringement plaintiff is concerned? Does fairness require that the character of the remedy match the character of the loss?

IMHO, the answer to this is yes, inasmuch as the goal of remediation is to, as far as is possible, make whole the party who has suffered the loss, something for which injunction is always perfectly suited in a case of proven patent infringement.

In a patent infringement scenario in which there is a proven loss, at least a portion of that loss will always be a loss of control over use and possibly disposition of the property. The equitable remedy of injunction is PERFECTLY tailored to restore that particular loss of control that was taken, from the party that took it unlawfully, and back to the party to whom it rightfully belongs. The EXACT control that was lost is returned, and the remediation, with respect to control, is perfect.

If evidence proving the adequacy of damages is insufficient to survive a SJ motion, a legal determination has been made that damages are unavailable to the plaintiff. With respect to damages, as opposed to injunction, a mere legal finding of infringement is insufficient evidence to prove adequacy.

However, for infringement, it is entirely sufficient. A finding of infringement is also sufficient to support other species in the genus of equitable remedies, and though species other than injunction might only imperfectly match the character of the loss, they are nevertheless appropriate, because equity is all about fairness, and there has been a proven loss sustained that is not compensible by monetary damages, and to not compensate in that situation would be unfair, if the equitable factors are met. Therefore, once infringement has been found, and damages ruled unavailable, a court is required to consider any and all equitable remedies asked for by the plaintiff.

Note that Posner has reversed his decision, and has put the parties on notice that they should address the equitable remedy of reasonable royalty in addition to that of injunction. This was an excellent ruling by Posner, and perfectly appropriate to the situation, IMO. You said “…assuming he backs it up in his final judgment, I don’t see any error in his approach.” Do you see the error now?

Here is the text of his order:

“I have decided to grant Apple’s request made at the June 7 hearing, for “a hearing at which the parties could attempt to satisfy the eBay factors and do a traditional injunction hearing.”…Each party may argue that it would be entitled to injunctive relief as to its patent or patents were the other party found to have infringed. The parties may submit briefs, if they wish…. The parties should be prepared to address the possibility of substitution for an injunction of an equitable decree for a reasonable royalty going forward. They should indicate any evidence in the existing record (for it is too late to supplement the record) bearing on the question of injunctive or other equitable relief. And if Motorola means to argue for injuunctive relief it should be prepared to address the bearing of FRAND on the injunction analysis.”

Will Posner singlehandedly force an end to the endlessly-escalating mobile patent wars? Let’s hope so. At the very least, his opinion seems to indicate that he realizes the ridiculous (and, often, baseless) nature of all of this never-ending patent litigation.

I respond on this thread as well as the Survey Response thread to point out that your response (as I cannot yet call it an answer) does not and cannot take the place of your answer, which is as yet not been forthcoming.

But here is my response to your response:

You state “if you need 200 words…” in a misleading turn of phrase, as I explicitly began my piece with “Ned, let’s put this on the table in its entirety.”

I did this for several reasons, not the least of which is your tendency to misconstrue context. And misconstrue you continue to do.

My several paragraphs on the critical difference between singular and group is completely ignored. Somehow you want to make the distinction between the top level category only and all else. That is simply legal error and is unfounded and unsupported by any legal theory or notion except for your agenda.

Further, “I believe I have responded to that post, just not like you wanted” is indeed correct. And you still have not. I did not call for a mere “response” – I called for answers.

You have not yet given me answers.

First point: consistency. When I say consistency, I do not mean the consistency of your attack on the distinct and particular category of business methods. You are only consistent in your inconsistency. I clearly indicated that the consistency that I am calling your attention to is consistency BETWEEN categories. This is plainly evident with my mention of medical methods – another point you have simply ignored. It was only in half-jest my mention of having a summer intern catalogue your responses and tally how lopsided against a psrticular category of methods patents – and in fact how inconsistent you are when it comes to discussions of categories. I really don’t need any such research. I no longer wait for you stipulation. It is a fact that you are inconsistent.

This brings me to the question you STILL have not answered: Why? Note in particular that I am not asking “whether?” which is the question you insist on answering – and answering falsely. There is no question as to whether. The question is “why?”

Why do you single out as a topic business methods?

Why the inconsistency in the disparate treatment of categories of methods?

Why the agenda against business methods in particular?

Merely saying feebly in your response that you do not do so is as unavailing as it is untrue.
Your statement of “I speak out endlessly about any statement that a particular class of subject matter other than the four listed classes ARE patent eligible subject matter without any qualification whatsoever.” is false on several levels. It is false as a statement onto its own, as even the four classes must still be vetted for patent eligibility – your use of “categorically” continues to be false and misleading. It is false as you speak out endlessly only on one particular class and have never spoken out on any other particular class.

AS I look at the sum total of comments on this subject, there is also a major difference between us Ned and one that leads to my superior position in this debate and in my general knowledge of law.

I look at people’s inputs and absorb them. You choose to ignore anything that you don’t like. You try to stick to your position even when such is shown to be weak and misguided. Take for example the discussion on set theory and the Supreme Court choice of language. A clear and rational expression of how the different abstract layers have been and should be viewed and you choose to ignore in its entirety with no logical reason given. You choose to mock that person and tell them to tell that to the Court – as if the Court would reproach that theory. In the court’s chosen language, the facts concerning the Supreme Court and their lessor level of patent law expertise only serves as a “obligatory fulmination” when perfectly valid rationale is supplied for reasons to choose better language.

Your vehemence is sorely misplaced.

“Obligatory fulmination” indeed, especially as can be seen that it is you that is ignoring the meaning of the words, and purposefully taking the discussion of eligibility out of the proper context of singular instance to category discussion as well as you continue to play word games with the improper use of the word categorically versus as a category.

Ned, the questions you need to ANSWER – and not just respond to – are:
1) Why do you inconsistently – and improperly – apply a category level view of eligibility to one category – at an abstraction level below the four enumerated categories
2) Why do you have an agenda against this particular (sub-)category of subject matter?
Answers (and not mere responses) are still required.

We are appraoching the month mark since I first posted these straight forward questions to you. The fact that you have not given straight forward answers screams so loudly, that your meager “responses” cower and hide in the absence of truth from you.

1. Motorola has a patent that is considered essential for 3G AT&T type networks by the standards committee. Motorola apparently has agreed to license all comers at a standard rate, 2.2%.

2. Apple does not have a license.

3. I don’t know Apple position on liability. I assume it has no serious position on validity and infringement, but was simply contesting damages.

What should Posner do?

And, tell me, please, if 2.2% is an establish FRAND royalty, just why this royalty was not the measure of damages?

Can Posner dismiss Motorola’s infringement case under these circumstances?

Even if he does, Motorola can refile tomorrow because Apple’s infringement continues. The infringement should be considered willful. What is a judge to do when Motorola requests a preliminary injunction?

“While both companies originally came to this case with lists of patents that the other had infringed, Judge Posner got Apple to whittle its list down to four patents, and forced Motorola (now owned by Google) to narrow its list down to one patent, which concerns a “method for performing a countdown function during a mobile-originated transfer for a packet radio system.” That method is considered “3G-essential” according to FOSS Patents, and must adhere to FRAND (fair, reasonable, and non-discriminatory) licensing terms. Judge Posner noted that, “if Motorola means to argue for injunctive relief it should be prepared to address the bearing of FRAND on the injunction analysis.”

(hint: if the remedy that makes the transgressed whole is exactly like the right itself, the remedy is not “harsh”)

LOL. Look up “specific performance” as a remedy in contracts. Essentially an injunction which is exactly like the right itself. You pretty much never get it at common law. And that’s a right the defendant agreed to perform in writing.

This isn’t France. You don’t get an order compelling the defendant to perform your right, unless you have a very specific reason why you need it. You get compensated for your loss, a pat on the head, and sent on your way. But seeing as you’ve been compensated for all the loss you could prove, you really shouldn’t be whining about it.

It would seem on its face that denying Apple such an injunction under these circumstances is an abuse of discretion.

It depends on what those few lines of code actually do. If they’re essential to a widely-used standard, an injunction is probably highly inappropriate. If they’re subject to FRAND, an injunction is certainly highly inappropriate.

they are subject to FRAND obligations.

Then their infringement can be fully compensated with monetary damages. If the royalty rate isn’t reasonable, they can go ahead and argue about that.

Perhaps, but a bicycle has positive attributes, whereas a patent only has negative attributes.

Yes, but a lawsuit demanding an injunction only ever asserts the negative attributes, i.e. someone else doing what you want them to stop doing. So what if your bicycle is also pink but patents are only black and white? That’s not the attribute we’re talking about.

I wonder if this is really more of a procedural maneuver by Judge Posner and the litigants. Does anyone have the order excluding Apple’s experts?

It could be that Apple’s theory of damages was the reason for the exclusion. If that is the case, Apple would want to appeal the decision, but the Seventh Circuit does not permit interlocutory appeals on Daubert issues.

It could be that the admission of the expert testimony will, in effect, be dispositive in this case. If so, Judge Posner opens the door to an appeal to the Federal Circuit on the expert witness issue without having to hold a trial first.

Well, we can wait to see the Judge’s opinion, but I think you’re underestimating the cost of undoing the simple programming, updating phones in the field, revising user guides, etc. This wouldn’t be a break-the-company problem, but it’s a lot more than nil. And that has to be weighed against the fact that Apple was apparently unable to prove any harm caused by the infringement. Yes, I know that there are many (two?) on this board who count the infringement itself as a grievous harm, but eBay is what it is.

Leo, I agree the issue is whether damages are an adequate remedy. Whether they are proved or not is entirely beside the point. Apple and Motorola are direct competitors, such that the harm to Apple is not subject to quantification. This should weigh in favor.

Furthermore, the balance of harm has to be weighed.

Here, it seems, that Apple’s patents are easily avoided by simple programming. The harm to Motorola from an injunction is virtually nill.

I think Posner has no grounds for avoiding an injunction against Motorola.

The more problematical situation is with Motorola’s FRAND patents. An injunction would force Apple off of AT&T, causing Apple a great deal of damage. But if Apple is unwilling to pay the standard FRAND royalty of 2.2%, what recourse does he have?

1. According to the May 22 order, it seems that all of Apple’s patents can be designed around by a few seconds of programming. While damages are not proved, I have no idea why Posner would suggest that an injunction should not issue. All that would do would be to force the very simple reprogramming to be cut in or get Motorola to make a substantial offer to Apple if it really wanted the patented feature in its phones.

2. On the other hand, Motorola’s patents are required for Apple to use AT&T’s network. Motorola licenses the patents FRAND for 2.2%. I see no justification for Posner not to issue an injunction so that Apple begins to either pay the FRAND royalty or get off of AT&T.

IANAE, I would urge you to read Posner’s May 22 order. It shows that in all cases, Apple’s patent are easily avoided by a few seconds of programming. All an injunction would do would be to force Motorola to actually cut in that programming, if they have not already done so. It would seem on its face that denying Apple such an injunction under these circumstances is an abuse of discretion.

Regarding Motorola’s patents, they are subject to FRAND obligations. But the royalty rate is very high, 2.2%. But Motorola’s patents are only required for AT&T connectivity. An injunction would force Apple off AT&T entirely.

Here, I think Apple should be required to pay an ongoing royalty of 2.2% for new AT&T phones, or stop selling them.

I don’t know how Posner can reasonably avoid a trial on Motorola’s patents.

THE POINT IS THAT POSNER FOUND THAT DAMAGES WAS NOT A REMEDY AVAILABLE AT LAW IN THIS CASE, NOTWITHSTANDING THE BELIEF OF THE PARTIES.

Errr… no. His preliminary order says that the patent owner couldn’t even prove there were any damages. That’s not the same thing as damages were not an available remedy. It’s also a huge leap to take the absence of any damages to mean that a plaintiff is entitled to the more harsh equitable remedy of an injunction.

Thanks for the comment, IBP. I respectfully disagree, for a couple of reasons.

He then used the parties’ belief that damages was an adequate remedy to conclude that, therefore, injunction was not.

I don’t think this is correct. He says that the parties’ belief that damages would be adequate weighs against the second factor in the injunction analysis. That seems pretty straightforward to me. The fact that the plaintiff was incapable or unwilling to proffer competent evidence as to the quantity shouldn’t change this analysis, and it certainly shouldn’t operate in the plaintiff’s favor.

For what it’s worth, I also think it makes little sense to view injuctive relief and legal remedies as substitutes for one another (as in, “well, if I can’t have money damages then I’m somehow entitled to an injunction.”). These seem to me to be fundamentally different types of relief addressed to different types of harm. In effect, an injunction gives the court a sort of police power over the defendant, extending into the future. That seems to me to be a good reason to view the injunction as a tool of last resort, and another reason why an injunction shouldn’t be given as a reward to the plaintiff for failing to establish the entirety of its case.

The crux here is that the second factor reads: “remedies available at law are inadequate”. THE POINT IS THAT POSNER FOUND THAT DAMAGES WAS NOT A REMEDY AVAILABLE AT LAW IN THIS CASE, NOTWITHSTANDING THE BELIEF OF THE PARTIES.

I don’t think this is correct, either. The plaintiff failed to avail itself of the remedies (a reasonable royalty or actual damages) that are available as a matter of law. Given a finding of infringement, the plaintiff is entitled to the remedy of a reasonable royalty, at a minimum, BUT the plaintiff must prove what a reasonable royalty. The remedy isn’t “unavailable at law” because the plaintiff fails to meet his burden. Instead, this plaintiff loses its entitlement, as a matter of law, because it fails to meet its burden.

There’s a difference between a “remedy available at law” and “this (available) remedy is now unavailable to YOU, because you failed to produce enough evidence to demonstrate your entitlement to it.” This is necessarily the case – it is certainly possible to pursue an injunction alone, and there is no need to establish the exact quantity of a reasonable royalty or the extent of the actual damages to decide the “inadequacy of available remedies” prong of the analysis. This prong isn’t about whether the quantity of the legal remedies is adequate; it’s about whether the nature of the harm suffered is remediable with money. Like it or not, eBay says that this must be addressed on a case-by-case basis. Judge Posner’s order says that the plaintiffs are probably going to lose in this particular instance. Again, assuming he backs it up in his final judgment, I don’t see any error in his approach.

Perhaps, but a bicycle has positive attributes, whereas a patent only has negative attributes.

Mighty convenient of you to stuff straw and forget about the critical differences in your equitable analogies when it suits you. And yes, we are talking about patents and not about property “in general.”

Damages are a form of remedy, as is injunction. Initial filings are essentially a claim for relief, and must identify, among other things, the type of relief sought. Post-filing and pre-trial, a plaintiff must adduce some evidence that the remedy sought is appropriate–this requires evidence of loss, and evidence that the remedy sought would adequately remediate said loss.

Such evidence is not offered to “establish a [general] right of relief”, in Posner’s words, but to establish that the court has the actual ability to grant such relief, should the right thereto be first established–which is a different issue entirely.

If damages were the only remedy sought, and no such evidence was adduced with regard to damages, a court could very well, and logically, cancel the trial, or possibly allow amendment of the complaint.

However, in this instance both damages and injunction were sought as remedies. Arguendo, let’s accept Posner’s finding that the evidence establishing that the remedy of damages would adequately remediate the loss was insufficient to withstand a motion for SJ–that leaves us with the injunction remedy. The same construct applies for the remedy of injunction, as was applied to the remedy of damages above.

Posner states that he “cannot find a basis for an award of injunctive relief”. IF there was actually no evidentiary basis for the adequacy of the remedy of injunction, the case could logically, and legally, be dismissed.

However, when the nature of the harm and loss in a patent infringement case is considered, the remedy of injunction is, initially, ALWAYS an adequate remedy, for at least that component of the harm that is comprised of a loss of control of use and disposition of the property. This logic seems to me unassailable–remember, I said that injunction is INITIALLY always an adequate remedy.

So in view of this, how did Posner conclude that he could not find a basis for an award of injunctive relief? He did it by cursorily going through the 4-factor test, and by relying on a false premise–that the adequacy of the remedies of damages and injunction are mutually exclusive, and that if one was adequate, therefore the other was not. He then used the parties’ belief that damages was an adequate remedy to conclude that, therefore, injunction was not.

This reasoning is faulty, as it rests upon the unsupportable premise that the remedies of damages and injunction are mutually exclusive. That premise ignores the actual nature of the loss suffered for which relief is sought. In a patent infringement case, there can be multiple types of loss–those for which damages are initially appropriate as a remedy, and those for which injunction is initially appropriate as a remedy. As the multiple types of loss can be suffered concurrently, they are not mutually exclusive–and by extension, neither are their respective adequate remedies mutually exclusive, and Posner’s premise is incorrect.

The only way his construct could make sense would be if one believed that the remedy of damages would always be adequate to remediate the type of loss that would normally be adequately remedied by injunction. Can this in fact be the prevailing view? If that were the case, then in situations where a plaintiff sought BOTH the remedies of damages and injunction, the second of the 4 equitable factors would never be satisfied, effectively forcing a plaintiff to choose, before the initial filings stage, between damages or injunction.

Injunction would have to be the sole remedy sought, such that the remedy of damages was not mentioned in the case and was hence not a remedy available at law.

The crux here is that the second factor reads: “remedies available at law are inadequate”. THE POINT IS THAT POSNER FOUND THAT DAMAGES WAS NOT A REMEDY AVAILABLE AT LAW IN THIS CASE, NOTWITHSTANDING THE BELIEF OF THE PARTIES.

His mistake is that he relies on the beliefs of the parties rather than upon his own conclusion of law in considering the 4 factors, a consideration that clearly requires the latter.

Does this constitute reversible error? Maybe not, if the total consideration he undertook of the 4 factors was insufficient to survive a SJ motion–but his stated reason for dismissing the case was that neither party could establish a right to relief, which is erroneous.

I maintain my original opinion that Posner has erred. Since I haven’t read the entire file, I offer no opinion as to whether that error constitutes reversible error.

Nice strawman, except that’s not what the “exclusive right” is when it comes to patents.

But you know that already, don’t you?

In case you need a little help: (the right to exclude)

35 U.S.C. 154 (a)(1)
Every patent shall contain a short title of the invention and a grant to the patentee, his heirs or assigns, of the right to exclude others from making, using, offering for sale, or selling the invention throughout the United States or importing the invention into the United States, and, if the invention is a process, of the right to exclude others from using, offering for sale or selling throughout the United States, or importing into the United States, products made by that process, referring to the specification for the particulars thereof.

Pretty much every right is an exclusive right, not only patents. The mere fact that you win your case is not a basis for a particular remedy, and never has been.

Unless you can show actual harm, the “damage to the exclusive right” is nothing more than the patentee being a bit sad that someone else is doing something that doesn’t adversely affect him but he he still wishes they wouldn’t do. Any sane judge will send you packing if that’s your whole case on damages – once he stops laughing.

I see that problem, but also think in the interest of judicial economy that Judge Posner considers important the patentee could say, I really am not seeking damages, just an injunction, to simply trial. Should he be denied an injunction then?

Are you suggesting that all the patentee needs to do is fail to present admissible evidence of a reasonable royalty rate, and then he’ll be entitled to an injunction every time? I hope you can see the obvious problem with that.

Can you imagine a circumstance where they wouldn’t merit 1% between the lot of them?

That’s not really relevant, because nobody ever gets sued by “between the lot of them”. A single plaintiff could well be entitled to less than 1%, even for a fair number of patents. Especially if the plaintiff only asserts a small number of them because proving infringement of hundreds of patents would be cumbersome.

Still, there’s no reason why a patented feature should necessarily be worth more than 1% of anything, even if there are lots of patents on it. There are numbers between zero and 0.01, you know.

Leo never forget that the troll’s ultimate goal is to get you to engage with them. You engaged, they won and accomplished their mission. That’s the hallmark of a good smart troll. The dum b ones don’t get responses.

I can’t see how the judge could ever award anything less than 1% of net profits under any imaginable circumstances.

The Nortel patent portfolio included hundreds of standard-essential patents. No doubt other large companies in the industry have hundreds or thousands of other patents that are essential to the same standard. Do you think each of those thousands of patents entitles its owner to 1% of the net profits from the sale of every iPhone?

My question was about monetary remedies generally. If you want money, you have to prove your entitlement. Sure, you don’t have to show any actual harm if all you want is the statutory reasonable royalty, but you still have to prove how much royalty you deserve to get.

It would be different if the statute said “no less than $50 per infringing article” or something. But it doesn’t. So we have to be reasonable.

LB: “full opinion to follow. I’ll bet you a quarter it has all four steps in it”
Reading 123: Then that opinion may not be clear legal error. Of course, if that happens then the original post’s conditions would not apply, would they?

Right. So your first post, in which you said “Try to focus on ‘however, many other causes of action (including patent infringement) do not require a showing of harm for the substantive case’ and realize that the horse of damage is before the cart of the offense” was a complaint about Posner skipping the four-step injunction analysis.

Welceome to the world of the patent blogtroll, where (1) there no people with ordinary skill in the art of identifying where information can be found on an information-storing composition; and (2) there are no people aware of any technology prior to the compact disc player.

It’s a sad world, filled with paranoid children who get their inspiration from Melvin Belli or some similar bloviator (arf arf).

Actually, you made no affirmative statement at all, which is the favorite trick of the more contumacious posters here. But your comment seems to support the earlier contention that Posner’s (preliminary) decision is a “clear error of law.” The alternative to Posner’s decision on damages is to proceed with the jury trial, since that (apparently) has been demanded.

Hasn’t there been an admission of injury (a valid patent has been infringed)?

I don’t think so. But under Judge Posner’s rationale here, it wouldn’t matter. You still have to produce evidence to support a finding of actual damages or a reasonable royalty, or you have to make a showing that you’re entitled to an injunction. The Judge says that the evidence isn’t in the record to support any of these remedies.

Why do you think an injunction is out as a matter of law?

Because Judge Posner’s order says so. At least, he says that this is his current thinking – this order isn’t actually disposing of the case but is merely giving a “heads up” in conjunction with canceling the trial.

I did not see the necessary four step analysis anywhere (the “no-short cut” of eBay works in both directions).

Judge promises a full opinion to follow. I’ll bet you a quarter it has all four steps in it.

Monetary damages may be approaching the limit of zero, but the damage to the patent right of exclusivity is a non-zero, non-vanishing entity (unless of course you believe that patents should just vanish).

I think so. I don’t know if this is a product or a process even, but if they are selling something, I can’t see how the judge could ever award anything less than 1% of net profits under any imaginable circumstances.

I read it again, and I read Posner’s order again. Posner has not made damages an element of infringement. But to have a case for adjudication you need to have redressability as well as an injury. Posner is saying that even if we assume an injury-in-fact (the infringement), there is nothing to redress since the plaintiff, as a matter of law, is entitled to neither damages nor an injunction. You may not like eBay, but that’s not Posner’s problem. You may disagree with Posner’s exclusion of the expert testimony. But given that exclusion, I don’t think he has made an “easily avoidable clear legal error” in disposing of the case at this stage.

Tell me again why we should have a jury trial when the plaintiff can neither receive damages nor get an injunction?

Read the post again. Try to focus on “However, many other causes of action (including patent infringement) do not require a showing of harm for the substantive case” and realize that the horse of damage is before the cart of the offense.

I’m pretty sure he’s aware of this, and Dennis was careful enough to say that this is the “usual” approach, as opposed to the only permissible approach. If discovery is closed and there is no (admissible) evidence as to damages, and if the evidence of record can’t support an injunction, why should it go to trial? To give the plaintiff the satisfaction of a final judgment of infringement but with no damages and no injunction? Or to generate another few hundred thousand in legal fees?

Assuming that Judge Posner has an evidentiary record that backs him up, I thank him for saving taxpayer resources.

For some causes of action, harm is considered an element of the offense that must be proven before liability is found. Ordinary defamation requires harm. Likewise, murder requires a death. However, many other causes of action (including patent infringement) do not require a showing of harm for the substantive case. Rather, the the usual approach in patent cases is to first determine whether infringement has occurred (without regard to the damage caused) and then determine the appropriate damages. This approach is derived by the patent statute that defines infringement in 35 U.S.C. 271 without regard to damages.”

You mean if the court doesn’t approve of the presented information, not “did not attempt to prove”. The fingers in the ears “neener neener neener, I can’t hear your evidence” approach is not a valid legal procedure.

All of the sketches above seem to me to miss the mark — the opinion says enough to disprove many of the hypotheses above.

Judge Posner says that (on his preliminary view, and he may change his mind) the evidence is insufficient to establish a claim for relief. Damages is an issue on which the patentee bears burden of proof, to a preponderance of evidence, as to amount.

This preliminary opinion doesn’t tell us what element of each party’s damages case is unsupported, but it could easily be that the two patentees each failed to adduce sufficient evidence to establish a non-speculative amount for a reasonable royalty.

I agree with several of the posters above, that the fact of infringement alone creates some liability. But that doesn’t relieve the patentee of the burden of establishing amount to a preponderance of evidence.

And I also agree with several posters above that — depending on the rationale — on first glance, this seems like low-hanging fruit for an appeal.

“Where, as here, monetary recompense is not sufficient as a remedy (for whatever reason), the correct remedy is injunctive relief.”

Absolutely. I was just going to type this.

“as here” isn’t a case where monetary recompense is not sufficient. It’s a case where (if Judge Posner is to be believed) zero monetary recompense is sufficient. That’s the exact opposite of a case where you’d want to impose one of equity’s harshest remedies. Especially if the whole thing turns out to be Apple’s fault for failing to adduce good evidence.

Yes, every patent has the theoretical prospect of being infringed. I’m talking about a commercial prospect of being infringed, resulting in some chance the patent owner will see some money.

If someone infringes your patent, that is BY DEFINITION the end of your control of its use, as the sole owner.

Infringers aren’t “using” a patent. You can tell, because they’re not doing something the patent owner has a right to do.

The patent owner can still do all the stuff he has a right to do with the patent, no matter how many infringers are out there. Look at the Nortel patents. Hundreds of them were standard-essential, which means they were infringed by everyone making, using, or selling a 3G phone. Probably not licensed to (m)any of them. Nortel still managed to sell them for a pretty penny, even as a motivated seller, which actually is one of the things you’re supposed to be allowed to do with your property.

1. I haven’t yet studied this case, but based on Dennis Crouch’s excellent write-up alone, it can’t be right that Motorola should be allowed to infringe an Apple patent without payment of at least a reasonable royalty.
2. It will be an interesting dynamic to see the Federal Circuit review a district court order entered by the Seventh Circuit’s Judge Posner sitting by designation.

What’s fascinating about proving damages is applying this to the NPEs. Arguably, the only complaint the NPE could make is, “I didn’t get my money back (and then some) on this patent that I bought.”

I don’t think we could apply a public utility model to patents/innovation that would invite a statutory ROI (such as returned to a provider of electricity).

So if the damage is that an investor can’t get a positive ROI on investing in IP and this is remedied in court by awarding the plaintiff, then one ought to consider a public utility model to limit the ROI.

You are completely wrong. Think about the etymology of the word “infringement”. EVERY patent has the “prospect of being infringed”, BY DEFINITION.

To suggest that “infringement is completely unrelated to the ability to control the use and disposition of the property in question” is a non sequitur. A patentee is most certainly NOT “just as free to control the use…whether or not the patent is infringed”, BY DEFINITION, because that very infringement is, in part, a diminution in the ability to control use.

If someone infringes your patent, that is BY DEFINITION the end of your control of its use, as the sole owner.

Think about the torts of detinue, conversion, trover, etc. applied to property rights having an incorporeal object.

So if the plaintiff fails to prove what is a reasonable royalty (because the court doesn’t care for any of the plaintiff’s evidence), then the reasonable royalty becomes zero? No, you and Posner are wrong.

Eliminating injunctions (eBay), was not a well thought out decision. People used to come to royalty agreements with injunctions looming.

I read the order. Posner acknowledges that there is evidence of loss–which is of course the case, as evidence of infringement IS evidence of loss.

Correct me if I’m wrong, but in order for a statement of claim to create a genuine issue of material fact, evidence of quantum of damages is not required to be presented–quantum is an issue for the damages phase of trial, only undertaken after the issue of material fact is adjudicated.

Evidence of infringement IS evidence of loss, which loss forms the basis of relief, said relief to be decided by the court, whether it be awarded in the form of damages, injunction, or both.

“Evidence of damages”, in Posner’s words, is not required to create a genuine issue of material fact.

He left himself wiggle room, acknowledging that he might change his mind. Let’s hope that he does. He should keep in mind that it’s “law AND economics”, not “law AS economics”. He should focus on the law part, the creation of rights and obligations, because the material legal fact in question is that of loss, NOT damages.

The harm is incredibly easy to identify: it is any diminution in control of use or disposition, the proximate cause of which is one or more unauthorized acts. “Property damage”, as you framed it with respect to negligence, is nothing more than a diminution in the value of the property right–or more particularly, a diminution in the ability to control the use and disposition of the property in question.

Yes, that’s where the tort/damage analogy falls apart.

Infringement does nothing to diminish the value of a patent right. In fact, infringement increases the value of the patent right, because a patent with no prospect of being infringed is worthless.

What’s more, the “ability to control the use and disposition of the property in question” is completely unrelated to the existence vel non of infringement. The “property in question” is the patent, and the patentee is just as free to control the use (i.e., suing infringers) and disposition (i.e., sale or license to others) whether or not the patent is infringed. Unlicensed infringed patents get sold all the time, sometimes for billions of dollars.

The patent does not confer on the patentee a right to practice the invention or have it practiced by others, much less a right to profitably do so. Unless he happens to be lawfully doing just that, he probably suffers no actual damages. If someone totals your car, you can’t drive it anymore. If someone infringes your patent, that doesn’t actually stop you from doing anything.

Anyway, if someone totals your car, you won’t get an injunction. You’ll get money. There’s even a tort that lets the judge force the guy who totaled your car to buy it, which should make the tort analogy even more offensive to you on property grounds than the trivial equitable notion that not everybody gets an injunction.

That’s precisely the reason a “reasonable royalty” is the statutory floor for damages. Because there is pretty much never any actual harm, and injunctions have never been automatic in equity. A reasonable royalty of zero is of course ridiculous, but a failure to prove a royalty rate is hardly beyond imagining, and the plaintiff has to run out of chances to prove his royalty rate at some point.

You own a bike (a bike of little value to you), it sits on your front yard and you never use it. Someone takes your bike for a spin every evening and returns it in the morning. This goes on for awhile and you don’t know someone has been using your bike for quite some time. Finally you catch the person who has been using your bike.

Would not a proper way to calculate the cost of damages be the fee that you could have extracted for renting your bike to this individual, regardless of the effect of loss on you?

Dennis: “In most tort cases, the harm is easy to identify (if not prove). A negligent driving accident results in property damage. Tortious battery leads to medical bills. However, the non-rivalrous nature of intellectual property often makes the harm more difficult to ascertain. No one is directly injured per se when a third party begins to use an inventor’s idea without authorization. Rather, the idea is still available and a third party’s separate use of the invention does not prevent the inventor from continuing use the invention as well.”

This statement evidences a fundamental misunderstanding of the basis of patent law, which basis is that of PROPERTY.

The functional basis of the concept of property is the right to control its use and disposition, or more specifically, the right to exclude others from exercising such control.

The harm is incredibly easy to identify: it is any diminution in control of use or disposition, the proximate cause of which is one or more unauthorized acts. “Property damage”, as you framed it with respect to negligence, is nothing more than a diminution in the value of the property right–or more particularly, a diminution in the ability to control the use and disposition of the property in question.

If another party totals your car, they have exercised control over its disposition and used that control to alter the vehicle; the control they exercised was achieved at the direct expense of your own control in the article–and it must be remembered that it is the control, and NOT the article, that is the basis of the property right (the physical article in this example, the vehicle, is merely the object of the right of control).

It makes no difference whatsoever to the concept of control, whether the object of the control is corporeal (like a vehicle) or incorporeal (like an “idea” as you put it–or correctly, “the subject-matter described in a claim”).

“The idea” remaining “available”, and the continuing possibility of the inventor’s “using the invention” are totally irrelevant to the injury.

The instant control is compromised in an unauthorized manner, the situation is “rivalrous”, the opposite of what you suggest.

Really, you need to either take some first-year law classes as a refresher, or more carefully consider what you write. I know this isn’t a peer-reviewed journal, but come on.

“Never can there come fog too thick, never can there come mud and mire too deep, to assort with the groping and floundering condition which this High Court of Chancery, most pestilent of hoary sinners, holds this day, in the sight of heaven and earth.” Charles Dickens, “Bleak House.”

Perhaps Judge Posner takes seriously his role as guardian of a scarce resource–a federal court. Perhaps he takes seriously his duty to minimize the cost to the public of an unfocused fog of words put forth by litigants and their experts. The Daubert Order (see link from another poster to this thread) suggests Judge Posner was unimpressed, to say the least, with the experts’ level of thought and preparation on significant issues.

I think Judge Posnet makes one simple but critical mistake. He is treating patent infringement as a simple tort.

It is not.

Infringement on its own is a damage to the constitutionally sanctioned right to exclude. Where, as here, monetary recompense is not sufficient as a remedy (for whatever reason), the correct remedy is injunctive relief. After all, ask yourself if the worth of the patent is so seemingly trivial, how much harm can come from an injunction? Of course, this presumes the patent is valid, which is the correct legal stance until shown otherwise in a court of law or a concluded post-grant proceeding in the Office.

Dennis, you’ve got an extra “no” in your quote of 284. The relevant line actually reads, “…adequate to compensate for the infringement but in no event less than a reasonable royalty for the use made of the invention by the infringer”.

Posner’s criticism of the definition makes little sense. Mathematically it’s perfectly reasonable to define a point as a line of zero length. 2300 years ago, Euclid defined a line as “a breadthless length” and a point as “that which has no part,” i.e. that which has neither breadth nor length, or, effectively, a line of zero length.

I think there’s good money on that Posner’s final order will be structured in nearly a perfect circle like this:

1. Let’s stipulate infringement and validity.
2. Apple failed to produce any evidence of damages whatsoever.
3. The statute requires at least a reasonable royalty.
4. Because a reasonable royalty might be best seen, in a context like this, as what a competitor could extract from another to offset the competitive harm, a reasonable royalty will have some relationship to what it can prove as its damages.
5. Since there were no damages proved, the royalty one might expect that Apple could have extracted from Motorola for this invention is approaching zero [ignoring nuisance value since those costs were sunk via litigation anyway].
6. Accordingly, the reasonable royalty for this invention is approaching zero and would never amount more than a 1/2 penny total, aggregate value for all infringement.
7. Since we do not have denominations less than a penny, case dismissed with prejudice.

Generally, I actually think that for a lot of patents the reasonable royalty calculation is skewed in favor of the patentee. The real rates an infringer would likely pay in an arms length transaction being significantly less than what patentees would get in a litigation.

I don’t know where the expert testimony failed, but there has to be, IMHO, some default minimum RR that exists, otherwise patents are mere paper.

I think that’s a non sequitur, Ned.

When loaning money, can’t we look to interest rates in general? We do, of course. So why can’t we do something similar with patents?

We can, of course. But the law says you have to provide competent evidence of what those “in general” rates are. Some BS, made-up, rule-of-thumb doesn’t cut it, especially if it’s only tied to the value of the product by “expert” pontification on the value of a particular product feature. Do you think Apple is entitled to 25% of the gross profit for the accused devices, as a reasonable royalty for a swipe-to-unlock feature?

From my reading of the order, I believe a motion filed by Motorola under Daubert prevented Apple expert testimony regarding a RR. (Posner refers to a May 22 order. It would be nice to have that.) Without a default RR (Fed. Cir. previously “dumped” the 25% of incremental profit default RR), there is no basis for a RR.

If the above is correct, I don’t understand what this case has to do with “harm” damages. A patentee who is not in business has a legal right to a RR regardless of so-called “harm.” The problem of course, is what royalty is reasonable. Is zero ever reasonable?

I don’t know where the expert testimony failed, but there has to be, IMHO, some default minimum RR that exists, otherwise patents are mere paper.

But, reading through the lines, that is what Dennis seems to be advocating: zero is a reasonable royalty. But why?

When loaning money, can’t we look to interest rates in general? We do, of course. So why can’t we do something similar with patents?

For example, from March 22: “Apple presumably spent a nontrivial amount of time drafting its order, and now Ihave done the same in responding to it. Yet it seems that Apple brought about this expenditure of scarce resources without first making a careful reading of the page or so of my order against which this motion is launched. Such inconsiderate sloppiness is unpro-fessional and unacceptable.”

also:
“[re a slide-to-unlock patent] Apple’s .. argument is that “a tap is a zero-length swipe.” That’s silly. It’s like saying that a point is a zero-length line.”

“A planitiff that cannot prove damages should not expect a court to speculate on the proper award. ”

Apparently, the judge disagrees that there’s such a thing as a ‘reasonable royalty’ and demands proof of damages. So one can infringe up the wazu, but if the patent holder can’t prove his sales went down as a result, the patent is worthless?

Interesting, albiet this famous and controversial 7th Cir. judge and professor says here himself that: “I will delay entry of judgment until I have prepared a full opinion, because in the course of that preparation I may change my mind. I will merely sketch the grounds for my tentativeview very briefly in this order.” [Also, as I recall, in two prior patent suits in which he similarly sat as a District Court trial judge he got reversed by the Fed. Cir., as I am sure he recalls.]
If the lack of any possible damages proofs is due to his rejecting the previously proposed damages experts under Daubert, as suggested, would not a less draconian order be to allow for new and better expert witnesses on damages and their depositions with a delayed trial date?
Dennis makes an excellent point re the patent infringement damages statue’s “..in no event no less than a reasonable royalty for the use made.” Furthermore, that same statute goes on to require damage calculations by the judge even without a jury. Likewise, without expert testimony?: “The court MAY receive expert testimony as an AID to the determination of damages..”